More Foreclosures Are Due to Job Losses

The wave of foreclosures that has rocked the U.S. has in large part been blamed on bad loans. But according to CNNMoney, an increasing number of people are losing their homes because of job losses. Freddie Mac reported that 46% of foreclosures in June were related to unemployment or loss of income.

“The two economic factors that most contribute to foreclosures are falling home prices and rising unemployment,” Richard DeKaser, chief economist for National City Corp. told CNNMoney. “It’s hard to pay your mortgage when you don’t have a job.”

Staggering Job Losses
The number of home foreclosures in the U.S. jumped a whopping 71% in September from a year earlier, according to RealtyTrac. The Bureau of Labor Statistics reported that 9.5 million people were unemployed in September. Jobs continued to be lost in the construction, manufacturing, and retail industries. Overall, about 1 million people have lost their jobs since the beginning of the year. CNNMoney reported that economists expect another 500,000 jobs to be lost between now and Inauguration Day.

Waiting for Aid
That means that more people won’t be able to afford to stay in their homes unless they get some kind of help with their mortgage payments. The U.S. government is expected to announce soon that $50 billion will be spent to address bad mortgages and foreclosures. The money would come from the $700 billion bailout package passed in October. Proposals being discussed include ideas to:
• Reduce monthly payments for homeowners who are delinquent on home loans.
• Offer government backing to lenders who write down a mortgage to 90% of its appraised value.
• Reduce interest rates on existing mortgage loans.
• Extend the length of time a homeowner has to repay their home loan.

And while there’s a possibility of another stimulus package being passed, it’s debatable whether that would have a significant impact on the foreclosure rate.

This entry was posted on Thursday, November 6th, 2008 at 8:01 pm and is filed under Topics for Seniors . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.